Mark strat simulation( firm presentation)

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Final presentation of the marketing simulation outcomes. It explains the marketing mix strategies, evaluations, results, situation analysis.Why some decisions were made and their outcomes. Its the whole marketing project journey from the beginning to the end

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Mark strat simulation( firm presentation)

  1. 1. FIRM By: Katherine Showalter, Evelyne Ringia, Chad Frutig, Stephanie Nord, and Dana Wu Markstrax presentation: December 9, 2013
  2. 2. Why Firm M? – Two products that could be targeted to high income earners and savers – High income earners had potentially higher profit margins but the savers represented a larger portion of the market
  3. 3. Executive summary- Strategy over all Initially we started by targeting multiple segments using two brands followed by R&D projects and a discontinuation of one of our brands in order to better position ourselves. In period five we decided to target multiple segments but this time using one brand for each segment; however, the sales did not generate enough revenue in a then highly competitive market. Some of the new brands were discontinued after only 2 periods and some after 3 periods. Finally, we decided to focus on only two segments using two brands that were doing better than the rest and the last period ended with those brands. Another strategic turn was the increase in prices in all of the new brands and the slight reduction of the price on the old one done in period 7. The results of this strategy are explained later in this presentation.
  4. 4. Executive summary- outcomes ROI results Calculated by Markstrat: 44% Own calculation: gain/cost of investment: 12% The ROI result of 44% is a better measure of marketing performance because it only takes into account figures which are related to marketing, unlike the 12% which accounts for the acquisition expenses as well.
  5. 5. Executive summary- outcomes (continued) Other measures of success: • Contribution before marketing • Steady increase in EPS (chart shown in outcomes) • Stable stock price in second half
  6. 6. Executive summary- Ending portfolio: Period 10 Evaluation of firm’s ending position • By period 10 Firm M had improvements • Revenue of $51,035 compared to $33,313 of period 0 • Slight improvement of contribution before marketing, $13,679 compared to $13,508 Recommendation for future management • We recommend having fewer brands in the market • We recommend defining the target market early on and creating brands that focus on their specific markets
  7. 7. Starting portfolio… (period 0) • Information about M – MOST had a lower base cost with a higher potential to make profits – Earnings before taxes: $13.3 M
  8. 8. SWOT for the starting portfolio • The brand MOVE did not have sufficient design capabilitiess to support its positioning with our target markets • Firm M had the second highest net contribution • Brand MOST had the highest market share, 18% Strengths Opportunities • Our potential target markets: High income earners had potentially higher profit margins but the savers’ large numbers offered a large potential for higher sales Weaknesses Threats • Firms with higher revenue could outperform M
  9. 9. SWOT (starting portfolio) continued Net contribution comparison: Period 0
  10. 10. Period 0 Competitive Analysis Competitors analysis, their relative market shares and pricing, distribution,. None of competitors had started R&D in period 0 Competitor relative market shares Competitor selling prices
  11. 11. Product Price Matrix strategy Promotion Place
  12. 12. Initial Strategies Target: MOVE for high earners and professionals; MOST for savers and shoppers Product We decided on a production of 175,000 units for MOST because the 152,000 units produced in period 0 were sold out. The Brand awareness for MOST was 54.6% and had the highest purchase intentions so a 16% increase in production was reasonable. For MOVE we decided to produce only 50,000 units because we had more inventory from the prior period, and its brand awareness and intention to purchase were not as strong as MOST’s. Price and positioning Price There were no price changes made during the initial period because the semantic scales showed our price positioned us well with our targets. 7 6 5 4 3 2 1 0 Explorers Highs Earners Professionals Ideal Price MOST Savers MOVE Shoppers
  13. 13. Place We allocated more people in mass merchandizing than specialty stores and the fewest in online stores. This decision was guided by the consumer survey study which showed that generally more population shopped in mass merchandizing. Promotion Target market allocation: MOST ($3.0 M), MOVE ($1.9 M) Explorers High earners Professionals Shoppers Savers MOST 10% 5% 10% 30% 45% MOVE 30% 30% 30% 10% 0%
  14. 14. Outcomes of the Initial Strategy Metrics Revenues Cost of goods sold Inventory costs Period 0 Period 1 Net results 33,313 36,997 (13,945) (14,256) (636) (605) 3,684 (311) (31) Contribution before marketing 18,732 22,136 Advertising expenditures (4,000) (5,241) 3,404 (1,241) Commercial team costs (1,224) (1,425) (201) Contribution after marketing 13,508 15,470 1,962 Market research studies Earnings before taxes (245) (458) 13,263 15,012 (213) 1,749
  15. 15. Product Strategy We positioned our original brands (MOST & MOVE) for high income earners and savers Matrix R&D strategy over the 10 period Brand Target Period 14,000 MOST Savers Original 12,000 MOVE High income earners MORE Professionals MEGA Followers MERMAID Adopters MELON Innovators MESSY Followers MOXIE Explorers 10,000 P3 8,000 6,000 P6 4,000 2,000 0 Period Period Period Period Period Period Period Period Period 2 3 4 5 6 7 8 9 10 R&D trend for 10 periods
  16. 16. Product Strategy continued Brand Management: Some of our brands were discontinued after being in the market for a number of periods because their performance did not meet our targets Move . Period 3 Period 8 Moxie We decided to focus on only two targets markets, professionals and followers, with two brands (MORE & MEGA) towards the final periods Messy This had a positive impact to our overall performance in the respective periods Production amount was always decided considering the inventory value and future selling prospects from consumer survey data Period 8 Mermaid Melon . Period 9 Period 9 . Discontinued Brands
  17. 17. Price Strategy • Most price changes done were a reflection of how much inventory was left, competition, and future selling prospects from consumer survey studies in aspects like brand awareness, purchase intentions, market shares. For new brands we relied on market studies. • A strategy turn occurred in Period 7 in which prices of all new brands were raised to in order to achieve improved profit margins. Price trend: All Matrix brands 700 600 500 400 300 200 100 0 P1 P2 Most P3 More P4 Mega P5 Melon P6 Mermaid P7 P8 P9 Move Moxie Messy P10
  18. 18. Promotion strategy Commercial teams and advertising were our major tools used for targeting and positioning. Research studies showed each brand’s status with regard to brand awareness, where our customers liked to shop, customer intentions to buy, and experiments which showed the impacts of advertising and commercial team allocation. Perceptual Maps were used to give direction on positioning. Advertising and commercial team expenses trend 6,000 5,000 A drop in advertising expenses in period 5 was caused by more money being allocated to R&D projects for 4 of our products 4,000 3,000 2,000 1,000 0 Period 2 Period 3 Period 4 Period 5 Advertising expenditures Period 6 Period 7 Period 8 Period 9 Commercial team costs Period 10
  19. 19. Place strategy • Places of sales in the Alpha market included specialty, mass, and online stores • Consumer surveys showed where every segment of customer preferred to shop • Experiments showed us the impact of commercial team allocation to our brands Bubble blots showing over all team distribution
  20. 20. Outcomes The price changes from period 7 showed tremendous improvements to both contribution before marketing and earnings before taxes. 25000 20000 15000 10000 5000 0 P2 P3 P4 P5 P6 P7 P8 P9 P10 -5000 -10000 Contibution before marketing Earnings before tax Contribution after marketing
  21. 21. Outcomes (Continued) • Stock Price Index 1 2 3 4 5 6 7 8 9 10 1019 998 670 708 579 456 471 464 463 453 Stock price Index 1200 1000 800 600 400 200 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10
  22. 22. Outcomes (Continued) Segment Shares- Sonites /Explorers Our segment share for explorers improved towards the second half which we suspect might be a result of our Moxie brand which was targeted the explorers from period 6 Revenues 60,000 50,000 40,000 30,000 20,000 10,000 0 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10
  23. 23. Comparison of the Initial and final portfolios Period 0 Revenues Period 10 Difference Cumulative Initial and 10 periods Final 33,313 51,035 17,722 404,431 -13,945 -28,045 -14,100 -224,719 -636 -1,390 -754 -14,431 Contribution before marketing 18,732 21,599 2,867 165,281 Advertising expenditures -4,000 -2,892 1,108 -37,673 Commercial team costs -1,224 -5,028 -3,804 -36,781 Contribution after marketing 13,508 13,679 171 90,826 -245 -1,081 -836 -8,652 Research and development 0 0 0 -24,150 Exceptional cost or profit 0 0 0 -7,681 13,263 12,598 -665 50,344 Cost of goods sold Inventory costs Market research studies Earnings before taxes
  24. 24. STRENGTHS Positioning of brand MORE • The introduction of MORE was a great success in all of our history because it was well positioned with professionals for a number of periods Advertising expenses • We made a fast turn around when it was clear that advertising our products further was not profitable and therefore allocated more of the budget towards the commercial teams. Improvements in second half • From period 6 to period 10 Firm M made constant improvements that can be demonstrated by the earnings before tax and contribution before marketing in slide 10.
  25. 25. CHALLENGES Competition • Some of our brands did not withstand the competition from other firms and eventually we had to withdraw them from the market. Brand introduction • We did R&D for 4 brands at a time and as a result there were scarce resources to support their existence in the market. Poor design of MOVE • The brand MOVE had a poor design and high base cost which affected its survival in the market.
  26. 26. Opportunities & Threats In period 5 our three products were MORE, MOST, and MEGA. We saw the opportunity to increase our sales through having one product for each target market. So in period 6 we introduced 4 new products, making it 7 total products The increased competition in the market proved to be our threat.
  27. 27. Segmentation, Targeting and Positioning are key What we learned Competition analysis: study what other brands are doing and try to position more efficiently than them by adjusting the marketing mix and commercial team Having many products doesn’t necessarily guarantee increase in sales; it’s better to focus on fewer products that are well positioned to attract their target market to build brand identity Pricing strategy: we used the exact price from the conjoint analysis but it didn’t take into account production costs so we lost money

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